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The co-chief executive of Partners Group is remarkably calm and softly spoken when he meets Financial News between shareholder meetings at London’s Landmark Hotel.

It belies an almost hyper level of activity at one of Europe’s largest private equity groups that has transformed it from about 45 employees with €3.1 billion of assets under management in 2000 to close to 800 staff and €42 billion of AUM today. It wants AUM to hit $60 billion (€52.8 billion) in the next five years, according to a results call in 2014.

The understated André Frei likes to stress the continuity over change. “The company has always grown since I joined. So growth is something we are used to,” he said.

By Partners Group standards, Frei is one of the firm’s early employees. He was hired straight out of university, where he had been studying insurance mathematics, by former chief executive Steffen Meister four years after the firm was founded to invest in private equity funds by three former Goldman Sachs bankers in 1996.

He acknowledges the change since then has been dramatic, but also logical. “It’s a big change but in German we say ‘if you say A you need to say B’ – I don’t know what the English equivalent is, but if you want to be a leading investment manager, you can’t remain a group of 20.”

That is putting it mildly. Partners Group has not only broadened into investments in real estate, private debt and infrastructure, its ballooning AUM means it now manages more money than European buyout firms Permira and Apax Partners and is bigger than most of its main rivals in the investing world.

Boston-based HarbourVest has assets under management of €32 billion and Pantheon of about €27 billion, the firm is also a fraction bigger than Carlyle-backed AlpInvest, which manages about €41.9 billion.

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But, in many ways, it is still early days for Frei and the business. He took over as co-chief executive of the firm at the age of 38 in 2013 alongside Christoph Rubeli. In 2014, the pair were named in Financial News’ list of the most influential executives in European financial markets for the first time. The plan is still to grow the business further.

Frei believes part of that will come from the natural growth of its clients, with Partners Group benefiting from strong demand for private equity from investors globally, something that it sees continuing.

Perhaps more importantly, the firm has also been looking to grow by spending its money in different ways. Instead of investing its cash with private equity funds, Partners Group wants to commit big money in buying businesses directly.

Frei said: “That is a very conscious shift. We wanted to build up this capacity and be a direct investor as much or more than we are a primary or secondary investor.”

Direct investing is a theme that other large investors, such as sovereign wealth funds and pension plans, have been pushing to do in a bid to reduce the high fees paid to private equity managers.
Frei argues that this is nothing new as the firm did its first direct deal in 1999 which makes it a continuation of the firm’s previous strategy.

Partners Group is helped in this effort by a huge amount of data gathered from the private equity funds it has invested in. This information on portfolio companies, such as cashflow and earnings figures, has been collected into a large database known as ‘primera’. The firm uses this to shape its decisions on which sectors and companies it wants to invest in directly.

Frei said: “It was a lot of effort to build up but it now serves a purpose that goes beyond risk and portfolio management. It’s really a source of information that allows us to connect the dots across our investments and even identify companies that we would like to buy.”

The size of the businesses Partners Group is looking to buy is also getting bigger. On average, the firm was writing equity cheques of about €50 million for deals in 2009 but that figure is closer to €250 million these days, according to figures reported in 2014. The firm inked one of its biggest direct deals to date in December 2014 with the purchase of components manufacturer Dynacast International for $1.1 billion.

So will Partners Group eventually stop investing in private equity funds? “No,” said Frei, pointing out that the firm likes the mix of investing through funds and sourcing its own deals.

He said: “We like direct investing, we like primary and secondary investing. We believe it’s a better offering to our clients to combine all three. But the opposite will not happen, we will not shift back. You will not see us do 60% [fund] investments.”

As well as increasing its assets under management through direct investing, the firm also hopes to tap the defined benefit pension scheme market in the US, UK and Australia, allowing pensioners to directly allocate some of their pension pots to private equity.

It is a tricky move as retail investors need to be able to take their money in and out of investments, something that is not naturally suited to private equity, where money is normally locked away for 10 years. But if Partners Group manages to crack the market, it would become one of the few alternatives managers that has access to this huge new group of investors.

Then again, in keeping with his style, Frei plays down any talk of uncontrolled expansion. “We don’t strive for growth that we don’t think would be prudent. We want to grow in a controlled and measured manner,” he said.

Correction: Partners Group said in its 2014 results call that it expected to hit assets under management of $60 billion, not €60 billion